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Margaritaville resort burdened by more delays, money troubles

Margaritaville Hollywood Beach Resort has hit a financing snafu throwing the long-anticipated project off course. Backers had hoped it would open in early 2014.
(Courtesy Margaritaville Hollywood Beach Resort LLC / July 2, 2012)

As if a lack of financing were not enough, the private developers behind the $138 million Margaritaville beach resort now have hit a snag that could delay the project by at least four months.

The snag centers on evaluations of how the project affects roads and public services. Hollywood said existing surveys were adequate, but Broward County, using a property record dating back to the 1920s, wants a new survey done.

With a new evaluation likely to take four months or more, the permitting process would be halted and potential investors might decide to wait to see approvals before coughing up any money, further delaying an already over-due venture.

"It's a domino effect," developer Lon Tabatchnik said. "If I had the money here in my hand, I couldn't start the project without the permits."

Now, the 17-story, 349-room Jimmy Buffett-themed resort likely won't open before January 2015, said City Manager Cathy Swanson-Rivenbark.

"The Johnson Street project has had a bit of a curse on it," Swanson-Rivenbark said, noting previous projects that had failed.

In an update on the stalled resort, Swanson-Rivenbark told city commissioners she "absolutely believes this project is going to happen," but it would be up to them to "draw a line in the sand" to determine when to pull out.

Tabatchnik initially hoped to raise the bulk of the financing from individual investors from China and other countries through a U.S. visa program.

He now is negotiating with undisclosed investor groups for the more than $70 million needed to complete the venture. The project's costs have escalated from $133 million to $138 million.

"He has four companies that he is working with, each has a different scenario," Swanson-Rivenbark said, hopeful that financing would work out to allow the "signature project" to move ahead.

But hotel analysts say chances for obtaining financing for new South Florida hotels are slim after the recent recession. Money is flowing more into upgrades of existing properties than new buildings.

Tabatchnik also is asking the city's Community Redevelopment Agency to lend $23 million instead of an initial $10 million to get the resort finished.

A bigger loan, Swanson-Rivenbark said, would require the resort to pay higher rents to the city and repay its debt into the general fund, thereby helping all city residents and reaping millions more dollars over the long term.

She calculated that over 50 years the city would get $488 million under the new proposal instead of $273 million under the old plan.

Tabatchnik has so far invested $6.5 million into the project and continues to pay the city $20,000 a month as a pre-lease payment.

"Everything we have asked for from the city we are willing to pay for," Tabatchnik said. "We are now willing to pay for that in additional rent and additional revenue to the city."

The commission took no action Tuesday but will consider July 18 whether to suspend enforcement of deadlines for financing and other project issues at least until they meet again in September.

At least one commissioner said the repeated delays and problems made him uneasy.

"I'm uncomfortable; I think there are a lot of people uncomfortable with this right now," Commissioner Beam Furr said. "I want to see the facts and the real figures."

But Commissioner Heidi O'Sheehan urged caution for a key development that could bring jobs, tourists and new revenue to Hollywood.

"Just to throw it to the curbside because we've hit a couple bumps is not in the best interest of any of us," O'Sheehan said.

The Margaritaville Hollywood Beach Resort will occupy nearly 5 acres at Johnson Street on the Broadwalk and across State Road A1A on the Intracoastal Waterway.

A revised finance plan and schedule are expected to be submitted this summer.